So, you’ve worked hard, saved diligently and are finally ready to purchase your first investment property. While it’s a very exciting time, it’s important to make an informed decision. To help you navigate the world of investment properties, here are four key tips for first-time investors.
#1 Consider upfront and ongoing expenses
A common mistake of many first-time investors is considering the property a one-time outlay. On the contrary, there are several upfront and ongoing costs to be aware of. These include:
Upfront – * House deposit (between 5-20% of total price)
• Loan application fee
• Mortgage insurance
• Stamp duty, transfer fees and mortgage registration
• Legal costs, and;
• Building, strata and pest inspections
Ongoing – * Mortgage repayments
• Strata fees
• Council rates
• Repair costs
• Property management fees, and;
• Vacancy fees (if the property is unoccupied)
#2 Thoroughly research the housing market
The research you do directly impacts your earning potential in the short- and long-term. When examining the housing market in the area you’re interested in, keep the following factors in mind:
• How much local properties are selling for
• Whether the area will experience growth potential
• If any proposed developments could (positively or negatively) impact selling prices
• Whether you have to renovate and if you have the required funds
• The area’s rental yields and vacancy rates, and;
• If the area has local amenities (i.e. schools, shopping districts, restaurants and public transport) close by
#3 Choose a property manager
If you’re busy or live a considerable distance from your investment property, consider hiring a property manager. They can handle nearly every aspect of your property, including advertising, tenant screening, property reports, and inspections, coordinating rent payments, property maintenance and handling complaints.
#4 Understand your legal obligations
Property managers can be extremely helpful, especially in your first investment. However, as a landlord, you need to have a thorough understanding of your legal liabilities. For instance, you need to be aware of your obligations prior to, during and when ending a tenancy period. These rules can differ depending on your state or territory. So, we recommend consulting your state government website for details.
If you’re ready to reap the benefits of an investment property, call or email us today.